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Business

Elisa Garcia: Mitigating the Costs of an Office Remodel

Even minor projects can be more expensive than expected, but there are ways to get the most for your money

These days, many companies are choosing to make a few minor revisions to their office space instead of building new office buildings or undertaking “gut-and-rebuild” interior overhauls. Whether demising space to sublease a portion of it, or making changes that improve productivity or attract customers, businesses are focused on ways to increase revenue with minimal expense.

But even minor remodels can cost much more than most people would expect. “Why so much?” a client recently asked. “We just want to move a few walls.” This is very a common question.

Moving walls is not as straightforward as most people think. Actually, walls are not moved at all. Existing walls are demolished, and new walls, in different locations, are built from scratch. Moreover, changing wall locations requires relocating HVAC vents, light fixtures, sprinkler heads, electrical wiring and outlets, telephone and data cabling, and sometimes moldings or wainscoting. Where existing walls are demolished, entire new areas of flooring and ceiling material are usually needed, because simply bandaging the wounds left by demolished walls would be unsightly. This means recarpeting an entire room or an office suite, so the carpet matches throughout.

Many construction trades are needed to relocate even one wall, so a general contractor must be hired to coordinate the necessary sequence of events amongst the various trades. The GC will hire framing, drywall, HVAC, electrical, cabling, flooring and demolition subcontractors, and charge about 20 percent above and beyond the total subcontractors’ fees. A minimum amount is charged to make it worth the effort, so small projects cost more per square foot than large projects.

And don’t forget the permits. Wall moves require a building permit. The building department requires a licensed architect to submit construction drawings for their approval. A minimum amount of drawing work is required regardless of the project size, so design fees, such as construction costs, are more per square foot for small projects.

Then there are the code upgrades. Most remodels occur in older buildings that are not up to code, and code upgrades are triggered by the permit process. Upgrading the toilet rooms, handicapped signage and parking, lighting and the life-safety system are commonly required code upgrades. These upgrades alone could cost more than the original remodel scope. However, a hardship waiver is usually granted for small projects, which caps the cost of code upgrades to 20 percent of the original remodel scope. So a $50,000 project would cost $60,000 with the required code upgrades added.

The building department also requires asbestos testing to be performed and submitted if there is any significant amount of demolition work. If asbestos exists, abatement in the area of demolition will be required in order to proceed with the project.

“Well, this all seems very unreasonable,” some clients say. The truth is that the construction process can be a bit painful at times, and it’s an architect’s job to make it as painless as possible for clients who are not familiar with it.

If a lease is coming up for renewal, it is common for a portion of remodel costs to be paid by the landlord. A property owner typically offers new tenants a “tenant improvement allowance” anywhere from $5 to $45 per square foot, and will do so for a renewing tenant as well. It may make sense to postpone a project until a lease renewal can be negotiated. The architect can assist in identifying the scope of work that should be negotiated with a landlord.

Phasing a project is a way to keep the cost manageable. An architect can develop a master plan, which can be implemented in two or three phases over time. The total cost will be slightly higher because of the inefficiency of this approach, but the smaller chunks may be easier to swallow. Also, much of the price tag can be depreciated over a period of time.

Often, goals can be met in a different way than the client originally envisioned. There are potentially multiple solutions of varying effectiveness and prices. The architect can offer out-of-the-box solutions of lesser scope, and ask, “What is the simplest way to solve this problem?” There’s often a solution, although it may only be an interim one, which doesn’t require permitting.

There are many creative ways to get the most for your money. It’s recommended to consult with an accountant and an architect to look at the costs and benefits of a potential remodel.

— Elisa Garcia is the owner of Garcia Architects, 122 E. Arrellaga St. She can be reached at 805.856.9118 or .(JavaScript must be enabled to view this email address).

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